Halifax is set to offer potentially thousands of mortgage customers a redress payment of £20 each after an error in the way interest is charged went unnoticed for eight years.

The bank has identified what it describes as a 'small number' of customers whose mortgage payments were not applied correctly.

It may potentially have overcharged any mortgage customer who chose to pay their mortgage weekly, make a one-off payment, or overpay their mortgage since 2010.

Halifax is to send a £20 redress payment to tens of thousands of customers following an error

Halifax claims that the 'vast majority' of customers saw a detriment of less than £10, and said it has written to those affected to notify them of their redress payment.

A spokesperson for the bank said: 'We have identified a small number of mortgage customers whose payments were not applied correctly, meaning they may have paid slightly more than they should in interest.

'We have written to impacted customers to apologise and make a payment of £20 to ensure no financial detriment.'

Beware big fees on mortgages

Those looking to move their mortgage can benefit from some of the cheapest rates ever on offer, but they must watch out for fees.

Data from financial information firm Moneyfacts revealed that average mortgage fees have increased by £15 since August to stand at £1,005 this month – the highest average recorded in more than five years.

As an example of how deals with high fees and low rates can end up being more expensive, Yorkshire Building Society has two two-year fixed rate products available at 60 per cent loan-to-value, one with a fee of £995 at 1.34 per cent, and one with no fee at 1.71 per cent.

On a £200,000 loan over 25 years the deal with the lower rate and £995 fee would cost £19,883 over the two-year deal period, while the higher rate of 1.71 per cent with no fee would cost just £19,674 over that time.

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